Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- MDxHealth SA (MDXH, Financial) reported a 21% year-over-year revenue growth for Q3 2024, with revenues reaching $23.3 million.
- The company raised $40 million in gross proceeds during the quarter, strengthening its cash position to $53.5 million.
- MDxHealth SA increased its 2024 revenue guidance for the third consecutive quarter, now expecting $87 to $89 million, reflecting confidence in their diagnostic value.
- The company achieved a 30% growth in total billable test volume, with tissue-based tests growing by 36% and liquid-based tests by 24% year-over-year.
- MDxHealth SA is on track to achieve adjusted EBITDA positivity in the first half of 2025, supported by strong revenue growth and operating discipline.
Negative Points
- Gross margins declined to 61.2% in Q3 2024 from 64.9% in Q3 2023, primarily due to a backlog of select Medicare cases recognized in the previous year.
- Operating loss increased to $6.1 million in Q3 2024 from $4.6 million in Q3 2023, driven by clinical study expenses and sales incentive compensation.
- The company faces challenges in expanding commercial payer coverage, with ongoing efforts required to improve ASP growth.
- Despite strong growth, MDxHealth SA has not expanded its sales organization, which could limit future growth potential if not addressed.
- The company acknowledges the potential impact of seasonality and fewer business days in Q4, which could affect revenue growth.
Q & A Highlights
Q: The guidance for the year implies a Q over Q step down from Q3. Is this conservatism or are there specific factors to consider for Q4?
A: Michael McGarrity, CEO: Q3 can be unpredictable due to seasonality, but our business grew through it. For Q4, holidays affect business days, but we are confident in meeting or exceeding our updated guidance.
Q: How does M&A fit into your strategy, and are you focusing more on in-house developed tests or acquisitions?
A: Michael McGarrity, CEO: We have a good mix of menu development. The GPS acquisition was transformative, but we also focus on internal development like the Resolve test. We aim to de-risk and become more obvious in the market, and while transformative M&A like GPS is less likely, we are open to channel growth opportunities.
Q: Can you discuss the revenue growth levers for 2025 and the variables at play?
A: Michael McGarrity, CEO: Our growth is driven by the adoption of our menu in urology and engaging pathology. Tissue-based tests carry the majority of revenue growth, and we have room for growth within each product segment. We are confident in the sustainability of our growth.
Q: What are the key levers for ASP growth, and what is the dialogue like with commercial payers?
A: Michael McGarrity, CEO: We aim to tighten our payer mix distribution curve. Our market access team is integrated with our commercial organization, helping us target effectively. We have opportunities for growth on the coverage side, and our distribution of payer mix is strong.
Q: Can you provide qualitative color on the early uptake of the newer germline test?
A: Michael McGarrity, CEO: Most of our Q3 growth was organic. We expect contribution from the germline test in the second half of the year, following a limited launch. We are optimistic about its potential and will assess revenue recognition based on coverage data.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
